ERM Glossary: Net Stable Funding Ratio
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The Net Stable Funding Ratio relates to a proposal within
Basel III that will require banks to maintain a minimum proportion of long-term
assets that are funded by long term, stable funding.
In this context, ‘stable’ funding includes most types of
customer deposits, long-term wholesale funding and the bank’s equity (more
precisely the portion of those types and amounts of equity and liability
financing expected to be reliable sources of funds over a one-year time horizon
under conditions of extended stress) but excludes most types of short-term
wholesale funding (the assumption being that this type of funding may be more
likely to be withdrawn at short notice). See Available Stable Funding
for more details.
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